RAMIREZ VS. CA, 144 SCRA 292 TOPIC/DOCTRINE An antichretic creditor cannot acquire land of debtor by prescription. Fact that such creditor has been in actual possession of land given as security will not bar its registration in favor of heirs of antichretic debtor. FACTS On September 15, 1959, petitioners-spouses Hilario Ramirez and Valentina Bonifacio filed an application for registration of a parcel of riceland in Rizal. In their application for registration, they alleged that to the best of their knowledge and belief, there is no mortgage or encumbrance of any kind whatsoever affecting said land and that they had acquired it by purchase from certain Gregoria Pascual during the early part of the American regime but the corresponding contract of sale was lot and no copy or record of the same was available. The Court found, however, that the applicants are not the owners of the land sought to be registered. They were ANTICHRETIC CREDITORS- mere holders placed in possessi...

COTONER-ZACARIAS VS. REVILLA, 740 SCRA 51 TOPIC/DOCTRINE Article 2132 of the Civil Code provides that “[b]y the contract of antichresis the creditor acquires the right to receive the fruits of an immovable of his debtor, with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his credit.” Antichresis requires delivery of the property to the antichretic creditor, but the latter cannot ordinarily acquire this immovable property in his or her possession by prescription. Similar to the prohibition against pactum commissorium since creditors cannot “appropriate the things given by way of pledge or mortgage, or dispose of them,” an antichretic creditor also cannot appropriate the real property in his or her favor upon the nonpayment of the debt. Antichresis also requires that the amount of the principal and the interest be in writing for the contract to be valid. FACTS Paz Castillo – Revilla borrowed money from Amada Cotoner ...

PANDO VS. GIMENEZ, 54 PHIL. 459 TOPIC/DOCTRINE Art. 2135. The creditor, unless there is a stipulation to the contrary, is obliged to pay the taxes and charges upon the estate. He is also bound to bear the expenses necessary for its preservation and repair. The sums spent for the purposes stated in this article shall be deducted from the fruits.   FACTS Gimenez was indebted to Pando in the amount of P8000. To secure payment of such loan, he executed and delivered a real estate mortgage over a building located in Sta. Mesa; and the leasehold rights on the lot upon which the building was erected, Hacienda Tuason being the lessor.   When Gimenez was about to leave Manila to attend to his business in Cagayan, he gave Pando full control, and complete and absolute administration over the property he mortgaged, on the condition that Pando would: (1)   attend to the administration, care and preservation of the building and property (2)   pay the premium on...

PCI LEASING & FINANCE INC. VS. TROJAN META INDUSTRIES, INC., GR NO. 176381, 15 DECEMBER 2010 TOPIC/DOCTRINE Section 14 of the Chattel Mortgage Law expressly entitles the debtor-mortgagor to the balance of the proceeds, upon satisfaction of the principal loan and costs. Prevailing jurisprudence also holds that the Chattel Mortgage Law bars the creditor-mortgagee from retaining the excess of the sale proceeds. Financing leasing contemplates the extension of credit to assist a buyer in acquiring movable property which he can use and eventually own, but if the movable property already belonged to the borrower-lessee, the transaction between the parties is a loan with mortgage in the guise of a lease. FACTS Sometime in 1997, Trojan Metal Industries, Inc. (TMI) came to PCI Leasing and Finance, Inc. (PCILF) to seek a loan. Instead of extending a loan, PCILF offered to buy various equipment TMI owned. Hard-pressed for money, TMI agreed. PCILF and TMI immediately executed deeds ...

TA-OCTA VS. SHERIFF EGUIA, A.M. NO. P-02-1568, 25 APRIL 2002 TOPIC/DOCTRINE A.M. No. 99-10-05-0 provides among others: "The Executive Judge shall, with the assistance of the Clerk of Court, raffle applications for extrajudicial foreclosure of mortgage under the direction of the sheriff among all sheriffs, including those assigned to the Office of the Clerk of Court and Sheriffs IV assigned in the branches.” FACTS Complainant Ta-Octa charged respondents sheriffs Eguia and Torres with grave abuse of authority in connection with a petition for foreclosure of chattel mortgage instituted by AC Lenders, against the complainant for the latter’s failure to comply with the conditions of the chattel mortgage and promissory note. The chattel mortgage covered a one unit motor vehicle. Ta-octa alleged among others that the petition for foreclosure of chattel mortgage had been served by the respondents on the same day it was filed with the Office of the Provincial/City Sherriff of Ilo...

MAGNA FINANCIAL SERVICES GROUP, INC. CS. COLARINA, G.R. NO. 158635, 9 DECEMBER 2005, 477 SCRA 245 TOPIC/DOCTRINE Article 1484, paragraph 3, provides that if the vendor has availed himself of the right to foreclose the chattel mortgage, “he shall have no further action against the purchaser to recover any unpaid balance of the purchase price. Any agreement to the contrary shall be void.” It is deemed that there has been foreclosure of the mortgage when all the proceedings of the foreclosure including the sale of the property at public auction have been accomplished. FACTS Elias Colarina bought on installment from Magna Financial Services Group, Inc., 1 unit of Suzuki Multicab. After making a down payment, Colarina executed a PN for the balance of P229,284.   To secure payment thereof, Colarina executed an integrated PN and deed of chattel mortgage over the motor vehicle. Colarina failed to pay the monthly amortization beginning January 1999, accumulating an unpaid balanc...

DY VS. COURT OF APPEALS, 198 SCRA 826, G.R. NO. 92989, 8 JULY 1991 TOPIC/DOCTRINE Mortgagor retains ownership over the property given as security, and has the right to sell it with the obligation to secure written consent of the mortgagee; Validity of the sale not affected if no consent was obtained from the mortgagee. FACTS The petitioner, Perfecto Dy and Wilfredo Dy are brothers. Sometime in 1979, Wilfredo Dy purchased a truck and a farm tractor through financing extended by Libra Finance and Investment Corporation (Libra). Both truck and tractor were mortgaged to Libra as security for the loan. The petitioner wanted to buy the tractor from his brother so on August 20, 1979, he wrote a letter to Libra requesting that he be allowed to purchase from Wilfredo Dy the said tractor and assume the mortgage debt of the latter. Libra approves the request. Thus, on September 4, 1979, Wilfredo Dy executed a deed of absolute sale in favor of the petitioner over the tractor in questio...

SERVICE-WIDE SPECIALIST, INC. VS. COURT OF APPEALS, G.R. NO. 116363, 10 DECEMBER 1999 TOPIC/DOCTRINE Mortgage credit may be alienated or assigned to a third person; The assignee’s consent is necessary in order to bind him of the alienation of the mortgaged thing by the debtor-mortgagor. FACTS This controversy is between a mortgagor who alienated the mortgaged property without the consent of the mortgagee, on the one hand, and the assignee of the mortgagee to whom the latter assigned his credit without notice to the mortgagor, on the other hand. ISSUE Whether the consent of the debtor-mortgagor is required before the assignment of credit of the mortgagee binds him. Whether assignee’s consent is necessary in order to bind him of the alienation of the mortgaged thing by the debtor-mortgagor . RULING No in the first issue. The court held that in case of assignment of credit, only notice to but not the consent of the debtor-mortgagor is necessary to bind the latter. ...

ACME SHOE, RUBBER & PLASTIC VS. COURT OF APPEALS, 260 SCRA 714, G.R. NO. 103576, 22 AUGUST 1996 TOPIC/DOCTRINE While a pledge, real estate mortgage, or antichre-sis may exceptionally secure after-incurred obligations so long as these future debts are accurately described, a chattel mortgage, however, can only cover obligations existing at the time the mortgage is constituted. FACTS Petitioner Chua Pac, the president and general manager of co-petitioner “Acme Shoe, Rubber & Plastic Corporation,” executed on 27 June 1978, for and in behalf of the company, a chattel mortgage in favor of private respondent Producers Bank of the Philippines. The mortgage stood by way of security for petitioner’s corporate loan of three million pesos (P3,000,000.00). In due time, the loan of P3,000,000.00 was paid by petitioner corporation. Subsequently, in 1981, it obtained from respondent bank additional financial accommodations totalling P2,700,000.00.2 These borrowings were on due date ...

TORRES VS. LIMJAP, 56 PHIL. 141, G.R. NO. 34385, 21 SEPTEMBER 1931 TOPIC/DOCTRINE A stipulation in the chattel mortgage, extending its scope and effect to after-acquired property, is valid and binding where the after-acquired property is in renewal of, or in substitution for, goods on hand when the mortgage was executed, or is purchased with the proceeds of the sale of such goods. FACTS These two actions were commenced in the Court of First Instance of Manila on April 16, 1930, for the purpose of securing from the defendant the possession of two drug stores located in the City of Manila, covered by two chattel mortgages executed by the deceased Jose B. Henson in favor of the plaintiffs. In both cases the plaintiffs alleged that the defendant violated the terms of the mortgage and that, in consequence thereof they became entitled to the possession of the chattels and to foreclose their mortgages thereon. Upon the petition of the plaintiffs and after the filing of the necessary...

MAKATI LEASING VS. WEAREVER TEXTILE, 122 SCRA 296 (1983) TOPIC/DOCTRINE Where a chattel mortgage is constituted on machinery permanently attached to the ground the machinery is to be considered as personal property and the chattel mortgage constituted thereon is not null and void, regardless of who owns the land. FACTS To obtain financial accommodations from Makati Leasing, Wearever Textile discounted and assigned several receivables under a Receivable Purchase Agreement with Makati Leasing. To secure the collection of receivables, it executed a chattel mortgage over several raw materials and a machinery – Artos Aero Dryer Stentering Range (Dryer). Wearever defaulted thus the properties mortgaged were extrajudicially foreclosed. The sheriff, after the restraining order was lifted, was able to enter the premises of Wearever and removed the drive motor of the Dryer. The CA reversed the order of the CFI, ordering the return of the drive motor since it cannot be the subject of...

  Acceleration clause is a stipulation stating that on the occasion of the mortgagor’s default, the whole sum remaining unpaid automatically becomes due and payable.   An Extrajudicial foreclosure may only be affected if in the mortgage contract covering a real estate, a clause is incorporated therein giving the mortgagee the power, upon default of the debtor, to foreclose the mortgage by an extrajudicial sale of the mortgaged property.   A Dragnet clause is a mortgage provision that is specifically phrased to subsume all debts of past or future origin. It is a valid and legal undertaking, and the amounts specified as a consideration in the contracts do not limit the amount for which the pledge or mortgage stands as security, if from the four corners of the instrument, the intent to secure future and other indebtedness can be gathered.   If the principal obligation is VOID, the mortgage is void.   A conventional mortgage is a kind of mortgage...

YULIONGSIU VS. PNB, 22 SCRA 587 (1968) FACTS Yulongsiu owned 2 vessels and equity in FS-203, which were purchased by him from the Philippine Shipping Commission, by installment. Plaintiff obtained a loan from defendant and to guarantee payment, plaintiff pledged the 2 vessels and the equity on FS-203, as evidenced by a pledge contract. Plaintiff made a partial payment and the remaining balance was renewed by the execution of 2 promissory notes in the bank’s favor. These two notes were never paid at all by plaintiff on their respective due dates. Defendant bank filed a criminal case against plaintiff charging the latter with estafa through falsification of commercial documents, and the trial court convicted the plaintiff and was sentenced to indemnify the defendant. The corresponding writ of execution issued to implement the order for indemnification was returned unsatisfied as plaintiff was totally insolvent. Meanwhile, together with the institution of the criminal action, defend...

GOLDENWAY MERCHANDISING CORP., VS. EQUITABLE PCI BANK, GR. NO. 195540, 13 MARCH TOPIC/DOCTRINE The right of redemption being statutory, it must be exercised in the manner prescribed by the statute, and within the prescribed time limit, to make it effective. FACTS On November 29, 1985, Goldenway Merchandising Corporation executed a Real Estate Mortgage in favor of Equitable PCI Bank over three parcels of land. The mortgage secured the Two Million Pesos (P2,000,000.00) loan granted to petitioner. Petitioner failed to settle its loan obligation, so respondent extrajudicially foreclosed the mortgage on December 13, 2000. Accordingly, a Certificate of Sale was issued to respondent on January 26, 2001. On February 16, 2001, the Certificate of Sale was registered. In a letter dated March 8, 2001, petitioner’s counsel offered to redeem the foreclosed properties by tendering a check. However, petitioner was told that such redemption is no longer possible because the certificate of s...

SPS. RABAT VS. PNB, GR NO. 158755, 18 JUNE 2012 TOPIC/DOCTRINE FACTS In 1980, the spouses Francisco and Merced Rabat (spouses Rabat) was granted a medium-term loan by the Philippine National Bank (PNB) in the amount of P4M to mature three years from the date of implementation. Subsequently, the spouses Rabat signed a Credit Agreement and executed a Real Estate Mortgage over 12 parcels of land which stipulated that the loan would be subject to interest at the rate of 17% per annum, plus the appropriate service charge and penalty charge of 3% per annum on any amount remaining unpaid or not renewed when due. A few months later, the spouses Rabat executed another document denominated as “Amendment to the Credit Agreement” purposely to increase the interest rate from 17% to 21% per annum, inclusive of service charge and a penalty charge of 3% per annum to be imposed on any amount remaining unpaid or not renewed when due. They also executed another Real Estate Mortgage over 9 parcels...

SPS. YAN VS. SPS. DY, GR NO. 171911 & 171868, 27 JULY 2011 TOPIC/DOCTRINE The doctrine of indivisibility of mortgage does not apply once the mortgage is extinguished by a complete foreclosure thereof as in the instant case. FACTS The subject parcels of land designated as lot 1, 3, 4, 5, 6, 8 including Lot 846 are originally owned by Spouses Tirambulos. They executed a REM over Lots 1,4, 5,6, and 8 in   favour of the Rural Bank of Dumaguete, predecessor of Dumaguete Rural Bank Inc. (DRBI).   Later, Lots 3 and 8446 were also mortaged in favour of the same bank. Subsequently, the Tirambulos sold all & mortgaged lots to spouse Dy without consent and knowledge of DRBI. Tirambulos failed to pay their loans so DRBI foreclosed lots 1, 4, 5, 6, and 8 and sold at public auction. DRBI was the highest bidder. Later, DRBI sold lots 1, 3, and 6 to spouses Yap. Roughly a month before the one-year redemption period was set to expire, the Dys and the Maxinos attempted to re...

PBN VS. SPS. CABATINGAN, GR. NO. 167058, 9 JULY 2008 TOPIC/DOCTRINE The word “between” ordinarily means “in the time interval that separates.” Thus, “between the hours of nine in the morning and four in the afternoon” merely provides a time frame within which an auction sale may be conducted. Therefore, a sale at public auction held within the intervening period provided by law (i.e., at any time from 9:00 a.m. until 4:00 p.m.) is valid, without regard to the duration or length of time it took the auctioneer to conduct the proceedings. FACTS Respondent spouses   Cabatingan obtained two loans, secured by a real estate mortgage, in the total amount of P421, 200 from petitioner Philippine National Bank. However, they were unable to fully pay their obligation despite having been granted more than enough time to do so. Thus, on September 25, 1991, petitioner extrajudicially foreclosed on the mortgage pursuant to Act 3135. Thereafter, a notice of extrajudicial sale was issued s...

PEOPLE’S BANK AND TRUST CO. VS. DAHICAN LUMBER COMPANY, GR NO. L-17500, 16 MAY 1967, 20 SCRA 84 TOPIC/DOCTRINE The stipulation in a mortgage contract that properties, which the mortgagor may acquire, construct, install, attach or use in its lumber concession, shall be subject to the mortgage lien is a common and logical provision in cases where the original properties mortgaged are perishable or subject to inevitable wear and tear or were intended to be sold or used but with the understanding that they would be replaced with others to be thereafter acquired by the mortgagor. Such a stipulation is lawful and not immoral and is intended to maintain, insofar as possible, the original value of the properties given as security. FACTS September 1948, Atlantic, a West Virginia corporation licensed to do business in the Philippines sold and assigned all its rights in the Dahican Lumber concession to Dahican Lumber Company. To fully paid and develop the concession, DALCO obtained a lo...